WASHINGTON - More than 60 percent of U.S. corporations didn’t pay any federal taxes for 1996 through 2000, years when the economy boomed and corporate profits soared, the investigative arm of Congress reported.
The disclosures from the General Accounting Office are certain to fuel the debate over corporate tax payments in the presidential campaign. Corporate tax receipts have shrunk markedly as a share of overall federal revenue in recent years, and were particularly depressed when the economy soured. By 2003, they had fallen to just 7.4 percent of overall federal receipts, the lowest rate since 1983, and the second-lowest rate since 1934, federal budget officials say.
The GAO analysis of Internal Revenue Service data comes as tax avoidance by both U.S. and foreign companies also is drawing increased scrutiny from the IRS and Congress. But more so than similar previous reports, the analysis suggests that dodging taxes, both legally and otherwise, has become deeply rooted in U.S. corporate culture. The analysis found that even more foreign-owned companies doing business in the U.S. — about 70 percent of them — reported that they didn’t owe any U.S. federal taxes during the late 1990s.
‘‘Too many corporations are finagling ways to dodge paying Uncle Sam, despite the benefits they receive from this country,’’ said Sen. Carl Levin (D., Mich.), who requested the study along with Sen. Byron Dorgan (D., N.D.). ‘‘Thwarting corporate tax dodgers will take tax reform and stronger enforcement.’’
A 1999 GAO study on corporate tax payments reached similar results.
The latest report has given new ammunition to the campaign of Democratic presidential challenger Sen. John Kerry, who has criticized President Bush for failing to crack down on corporate tax dodgers.
Kerry wants to end corporations’ ability to park their overseas earnings in tax havens, to discourage outsourcing; in return, he is proposing a lower U.S. corporate tax rate.
A spokeswoman said that Kerry ‘‘wants to make America more fair, so that average Americans don’t have to pick up the tab for corporate-America profits.’’
To be sure, Kerry has supported some of the most recent big corporate breaks, such as those contained in a 2002 economic stimulus bill.
And the latest GAO report focused on tax avoidance that took place entirely during the Clinton years.
A spokesman for the Bush campaign said Kerry’s own campaign has acknowledged its plan wouldn’t stop outsourcing.
‘‘Sen. Kerry has a habit of putting forth political statements that wouldn’t achieve the policy goals that he says they would,’’ Bush spokesman Scott Stanzel said.
An IRS spokesman noted that the agency recently has stepped up enforcement activity for business taxpayers.
The Bush administration’s 2005 budget request includes a 10 percent increase for IRS enforcement, mostly to go after more corporations.
The GAO report also may further fuel a drive in Congress to crackdown on a variety of corporate taxdodging strategies, such as a recently discovered leasing maneuver that allows companies to buy up depreciation rights to public transit lines, highways and water systems.
Senate tax-committee leaders have released a list of companies involved that includes a number of wellknown financial firms, such as First Union Commercial Corp., a unit of Wachovia Corp. Wachovia has defended its involvement, saying the transactions are legal.